Written by

Catherine Sommervold, vice president of medical affairs and regulatory innovation at pharmaCline, and CEO Steve Keough examine a swab that came out of the incubator at the GEAR Center. / Jay Pickthorn / Argus Leader

More

ADVERTISEMENT

A Sioux Falls biosciences company will have its product on pharmacy shelves across the nation next month, after nearly 10 years of research and more than $2 million in funding.

The achievement also signifies an important marker for the state and region’s larger effort to recruit and grow the industry.

Between 2001 and 2010, South Dakota experienced a 37 percent increase in biosciences jobs, according to a report by Battelle and the Biotechnology Industry Organization. The state has 325 biosciences organizations that employ almost 5,000 people.

PharmaCline, a pharmaceutical company, is one of them.

The company moved to Sioux Falls in 2010 after a 50-state search for a location. It is based out of the South Dakota Technology Business Center and has seven employees. Its signature product, Diabecline, is an antibiotic aimed at people with poor circulation in their feet, such as those with diabetes.

Diabecline is regulated by the Food and Drug Administration. It uses tetracycline, which has become less effective as bacteria have developed a resistance to it. PharmaCline developed an ointment that revives its original strength.

The ointment creates a large kill zone for bacteria, but it’s also waterless, founder and CEO Steve Keough said. Because it doesn’t have water molecules, it seeks out water and wicks water from the surrounding area when applied to the skin. When the ointment comes into contact with bacteria, it sucks water temporarily out of the cell and puts it into a kind of chemical shock, allowing the tetracycline to work, Keough said.

Diabecline is part of pharmaCline’s wound care division, one of three areas in which the company is developing products. The other two are dental and animal sciences. However, the wound care division is expected to create a majority of the revenue in coming years, Keough said.

“Really, our goal is to reduce the incidence of these large wounds developing when they can be prevented by taking care of the small wounds in a proper way,” Keough said. “That’s really our goal. We’re very focused on patient care, wound healing, the art and science of doing that. We know that if we do that then everything else good will happen.”

(Page 2 of 3)

Keough’s interest in wound care began years ago as he saw many ointments that weren’t working, particularly during the Iraq War where it was difficult to get wounds cleaned effectively.

“I’m a retired naval officer, and it really bothered me that we couldn’t solve that problem,” he said. “That same need is happening among a much broader part of the population and that’s the part of the population that doesn’t have good circulation in their feet.”

In 2011, the company began sales of Diabecline but realized that distribution of the bottle form wasn’t realistic because it was cost prohibitive and provided too many doses for the average user. So the company developed a patented technology that provides the medicine in a unit dose swab. Each box will provide 10 doses when it hits shelves next month.

Keough said the product will be “widely available” as the company works with retail pharmacists, podiatrists and long-term care providers to bring it to patients.

As pharmaCline moves into widespread distribution, marketing and advertising will become the next major expense. Though Keough said the company has been “efficient in our losses so far,” with just more than $2 million spent to get the product to market, it typically takes about a decade to develop a successful pharmaceutical. The company’s goal is to turn a profit in the first full year of distribution.

The hope is to raise $7.5 million with a new private placement offering, the second the company has done.

And besides working to offer stronger, pharmaceutical strength options that can be used on bigger wound issues, pharmaCline is developing two dental products, one that helps with sensitivity and another that helps remove tartar and plaque. A recently created animal sciences division is exploring how products can be developed in that arena.

PharmaCline has used both the technology center and GEAR Center in Sioux Falls, and Keough said the state’s infrastructure was a key reason he decided to locate the business here instead of his native St. Paul.

(Page 3 of 3)

Mel Ustad, director of commercialization with the Governor’s Office of Economic Development, said the process of getting a product to market can be challenging for smaller companies not only because of the large amount of funding necessary but also because it takes a lot of business experience.

Ustad said South Dakota has chosen biosciences as a growth industry because it fits well with existing industries.

“It is really one of our strengths,” he said. “If you look at the bioscience industry ... it’s a three-legged stool: Heal, feed and fuel the economy.”

That means the sector plays off three industries that already are well-established in South Dakota: health care, agriculture and biofuels, such as ethanol.

The state in recent years has launched numerous programs and initiatives such as research centers, grant programs and development parks and other facilities, including the GEAR Center at the University Center and the South Dakota Technology Business Center, to encourage bioscience research and commercialization of products.

In the case of GEAR, the partnership with the technology business center ensures companies have access to entrepreneurial support services, said Dan Engebretson, chair of biomedical engineering and GEAR’s director for the University of South Dakota.

“It’s a hard process in biosciences and biotech because you almost certainly have to deal with the FDA,” he said. “It’s inherently a slower process than, say, some of the information technology. If you’ve got a great new website idea, you can go from idea to functioning business in weeks, but if you get into the biotech, biosciences, most likely some regulatory agency is going to be involved and that slows things down.”

The GEAR Center is exploring the idea of building a certified Good Manufacturing Practices lab that would allow biosciences companies to do pilot scale production of materials as they work on clinical trials and FDA approval, Engebretson said. It’s an addition that, if cost effective, could help make the decision of where to locate manufacturing facilities even easier, he said. The South Dakota Board of Regents also recently approved a research park near the GEAR Center that could house such facilities.

“By keeping the pilot scale stuff here, to me, it just seems to make that decision to build that part of your company here even more appealing,” Engebretson said.

And manufacturing can be a big hurdle for companies such as pharmaCline, which makes its product near Des Moines.

“Pharmaceutical manufacturing capability here is lacking substantially unless it happens to be an internal thing,” Keough said. “In terms of general manufacturing, that is not available in the state. … We’re hoping the potential for domestic manufacturing is realized when the GEAR Center expands.”